Please help us continue to provide you with free, quality journalism by turning off your ad blocker on our site.

Thank you for signing in.

If this is your first time registering, please check your inbox for more information about the benefits of your Forbes account and what you can do next!

I agree to receive occasional updates and announcements about Forbes products and services. You may opt out at any time.

I'd like to receive the Forbes Daily Dozen newsletter to get the top 12 headlines every morning.

Forbes takes privacy seriously and is committed to transparency. We will never share your email address with third parties without your permission. By signing in, you are indicating that you accept our Terms of Service and Privacy Statement.

China Pledges To Buy $200 Billion Of American Goods Under Phase One Trade Deal

The deal includes Chinese commitments to buy more U.S. goods in four industries.

Costfoto/Barcroft Media via Getty Images

Topline: With the Phase One trade deal signing scheduled for tomorrow, new details have emerged about China’s pledge to significantly ramp up purchases of U.S. exports including manufactured goods, food, farm products, energy and services, sources told Reuters.

The Phase One deal includes agreements on intellectual property, technology transfers and currency as well as explicit commitments from China to buy at least $200 billion of U.S. exports over the next two years, according to a U.S. Trade Representative document.

The numbers are expected to be confirmed on Wednesday at a White House signing ceremony attended by U.S. President Trump and Chinese Vice Premier Liu He, according to Reuters.

The target for manufactured goods is the largest, with China pledging to spend an additional $80 billion on U.S. autos, auto parts, aircraft, machinery, medical devices and semiconductors. China will also buy over $50 billion more in energy supplies and around $35 billion more of U.S. services.

Chinese purchases of U.S. agriculture products (a critical component of the Phase One deal) will increase by $32 billion, or $16 billion a year, sources told Reuters. That’s still short of the $50 billion annual goal called for by Trump, however.

According to the USTR document, purchases of American exports will continue beyond the two-year period: “China’s increased imports of U.S. goods and services are expected to continue on this same trajectory for several years after 2021 and should contribute significantly to the rebalancing of the U.S.-China trade relationship.”

Stocks were mixed following the news on Tuesday: The S&P 500 and Nasdaq Composite indexes both traded down by 0.15% and 0.24%, respectively, while the Dow Jones Industrial Average gained 0.11%.

Crucial quotes: “The market is skeptical on the benefits of the deal, but relieved at the reduced chance of an escalating trade war,” says Charlie Bobrinskoy, head of Ariel Investments. “Most of the details have been leaked, so there are some decent-size numbers in terms of agricultural purchases—and that’s one sector that should benefit from this—but overall we’ll see more of a return to pre-trade-war levels of Chinese purchases rather than significant new markets.”

“The fact the U.S.-China trade war isn’t escalating further is certainly beneficial, but stocks are largely already reflecting ‘Phase One’ in full,” wrote Adam Crisafulli, founder of Vital Knowledge, in a note on Tuesday. He predicts that the Phase One signing ceremony “will contain a lot of rhetoric and theater,” but investors "shouldn’t conflate that with substantive change—Washington is keeping the majority of its tariffs in place, and the U.S.-China relationship is set to stay fraught for the foreseeable future.”

What to watch for: Such a large increase in Chinese imports of U.S. goods has raised some skepticism on Wall Street. USTR Robert Lighthizer told Fox Business yesterday that China’s commitments would be monitored closely: “We expect them to live up to the letter of the law,” he said. “We’ll bring cases, we’ll bring actions against them if they don’t.” The South China Morning Postreported on Tuesday, however, that the Phase One deal is “more of a political document than an economic road map with little chance it will inspire a meaningful phase two agreement any time soon.”

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an

…

I am a New York—based reporter for Forbes covering breaking news, with a focus on financial topics. Previously, I wrote about investing for Money Magazine and was an intern at Forbes in 2015 and 2016. I graduated from the University of St Andrews in 2018, majoring in International Relations and Modern History. Follow me on Twitter @skleb1234 or email me at sklebnikov@forbes.com